A proposed new standard on corporate and other debt issues from the FICC Markets Standards Board (“FMSB”) suggests that banks should be more transparent about their allocation policies and investors should make sure their orders are a true representation of their demand.
The New Issue Process Standard for the Fixed Income Markets sets out a range of improvements to the new issue process in the European market, from the granting of a mandate to publication of statistics.
The standard, which is being published as a transparency draft for comment, builds on the ICMA code for investment grade debt but would apply to all widely syndicated offerings of credit products in the wholesale markets, including investment grade, high yield, securitization and emerging market debt.
The standard is the third to be published by the FMSB, following earlier standards on Reference Price Transactions and Binary Options in the commodities markets.
Mark Yallop, Chair of the FMSB, said: “This standard is the result of a unique joint effort by corporate users of the market, institutional investors and underwriting banks to bring greater clarity to the process for issuing debt and to ensure it works fairly and effectively for all concerned. We believe it is a significant step in raising standards.”
This is what good practice looks like whatever part of the world you are in.
Robert Rooney, Chief Executive of Morgan Stanley International and chair of the FMSB’s Fixed Income, Spread Products sub-committee, said: “These proposals are aimed at the wholesale fixed income markets in Europe but over time we think market pressures will lead to this standard being adopted more broadly internationally. This is what good practice looks like whatever part of the world you are in.”
Russell O’Brien, Group Treasurer, Royal Dutch Shell and FMSB Board Member, said: “Corporates issuing debt in the fixed income markets will welcome having greater clarity and transparency in the process. We would like to see all our syndicate banks and investors adopting this standard.”
The new standard is applicable to all the main participants in the wholesale fixed income markets in the Europe, including issuers, investors and underwriting banks. Although initially the standard will be adopted by FMSB members in respect of issues in the European markets, the expectation is that primary markets participants in other jurisdictions will adopt the standard over time.
The main proposals in the standard are that:
· Banks’ allocations policies should be made available to market participants.
· Issuer preferences in the allocation process should take priority.
· When a mandate is granted, the lead banks and issuer should agree a document setting out the issuer’s aims for the transaction and how the banks will achieve that, including allocation preferences and marketing strategy.
· Banks should disclose to the market their policy on how they select investors for market soundings and investor roadshows.
· Lead banks should agree a strategy on book disclosure frequency with the issuer. Book updates should be disclosed publicly and should not be misleading.
· Investors need time to collate their demand for a transaction. It is best practice not to make significant changes to indicative issue terms or publicise the order book size during the last 15 minutes of the bookbuild.
· Investors should put in orders which are a true reflection of their demand and should not be misleading.
The FMSB is seeking comment from interested parties on the New Issue Process Standard for the Fixed Income Markets over the next two months. Submissions should be sent to firstname.lastname@example.org by midday (12:00pm BST), 17th January, 2017. A final version of the standard will be published by the FMSB after evaluating public comments.
Final versions of the FMSB standards on Reference Price Transactions and Binary Options in the commodities markets have now been posted on the FMSB website at www.fmsb.com following the period for comment.
Green Tech Start-Ups: Are they the Future?
Endless innovations are occurring in green companies, reinventing the industries they belong to. Gradually, they are beginning to amass more success and popularity. Consequently, these factors serve as a good indicator for green technology businesses, and their development must begin somewhere.
Green tech start-ups boast a wide array of opportunities for the economy and environment, while boosting recruitment openings with valuable services. While the technology industry is littered with high revenues and competition, the green tech start-ups are the clear sign of a cleaner future.
Fulfilling a Genuine Need
Many tech companies will market themselves as the ultimate tech giants to shift stock and make profit. As they all vie for attention through warped corporate rhetoric, there is only one ethical winner; the start-up green tech company.
Some argue that mainstream tech businesses have grown far too big, branching out into other industries and standing between the consumer and practically everything they do. However, green tech start-ups go beyond the shallow ambitions of a company, answering a call to sincerely help the customer and climate in any way they can. Of course, this is an attractive business model, putting customers at ease as they contribute to a humanitarian cause that is genuine through and through.
After all, empathy is a striking trait to have in business, and green tech start-ups maintain this composure by their very nature and purpose.
Despite the pursuits for clean energy still needing more awareness, green tech is an area that is ripe for contribution and expansion. There’s no need to copy another company or be a business of cheap knockoffs; green tech start-ups can add a new voice to the economy by being fresh, fearless and entrepreneurial.
Technology is at its most useful when it breaks new ground, an awe that eco-friendly innovations have by default in their operations. Of course, green tech start-ups have the chance to build on this foundation and create harmony instead of climate crisis. Ultimately, the tech advancements are what revolutionise clean energy as more than an activist niche, putting theory into practice.
Despite the US gradually becoming more disengaged with green technology, others such as China and Canada recognise the potential in green technology for creating jobs and growth in their respective economies. The slack of others spurs them on, which creates a constant influx of prospects for the green tech sector. Put simply, their services are always required, able to thrive from country to country.
A Fundamental Foresight
Mainstream technology can seem repetitive and dull, tinkering with what has come before rather than turning tech on its head. Since 2011, technology has been accused of stagnation, something which the internet and petty app services seem to disguise in short reaching ideas of creativity.
However, green tech start-ups aren’t just winging it, and operate with a roadmap of climate change in the years ahead to strategize accordingly. In other words, they aren’t simply looking to make a quick profit by sticking to a trend, but have the long-term future in mind. Consequently, the green tech start-up will be there from the very start, building up from the foundational level to only grow as more and more people inevitably go green.
They can additionally forecast their finances too, with the ability to access online platforms despite the differing levels of experience, keeping them in the loop. Consequently, with an eye for the future, green tech startups are the ones who will eventually usher in the new era.
Green Companies Find Innovative Ways to Generate Capital to Expand
Green business is a booming opportunity for shrewd, environmentally conscious entrepreneurs. According to a white paper by the Association for Enterprise Opportunity, green businesses in the food service industry and other verticals are growing up to seven times faster than their conventional competitors.
“Green market segments in the United States are growing fast. Growth rates of “green” segments are outpacing conventional segments in every industry where we collected data – for example, over the decade ending in 2011, the U.S. organic food category grew at a rate of 238% compared to 33% growth for the overall food market, and most forecasts indicate that the shift to green will only accelerate across industries. Green business opportunities will be even more prolific over the next few years, because millennials are placing greater emphasis on environmentally friendly solutions.”
Unfortunately, many promising green companies are struggling to generate revenue. They need to be more creative to find funding opportunities in 2017.
Funding challenges green businesses face
After the financial crisis struck in 2008, banks and other traditional lending institutions became much more conservative about lending money. Many green businesses turned to grants provided by the Obama administration for funding. However, most of those grants have since been suspended under the Trump administration. Congress had difficulty resuming them, because most of the green businesses that were funded had a lower survival rate than the national average.
Without funding from either traditional banks or government grants, green businesses were forced to look for other financing options. Here are some options they have available.
Other lending institutions
While corporate banks are less likely to finance new businesses these days, many smaller financial institutions are more likely to assume the risk. Specialty lending institutions and credit unions with a strong social mission are often willing to invest in promising green businesses.
However, these lenders still require perspective borrowers to submit formal business plans and proposals on how they will use their funding. Too many of them have been burned by poorly managed green companies, so they must be cautious with lending to them.
Many other countries are more invested in green development than the United States. Companies with a presence in Norway or other European countries should consider seeking loans from lenders in those jurisdictions, such as Lånemegleren.
Green bonds are new financial instruments that have been developed specifically for financing green businesses. The Climate Bond Standard introduced a number of policies to ensure green bonds would be safe for investors and a reliable funding opportunity for green businesses around the world. By balancing the needs of both stakeholders, they have helped facilitate green financing.
The market for green bonds nearly quadrupled between 2013 and 2014. It rose to over $100 billion in 2015.
Green entrepreneur should find out if their business model is compliant with the climate Bond standard. They may be able to tap a growing source of funding.
Crowdfunding is another very popular way for all types of businesses to generate capital. Green businesses tend to benefit more than most other organizations, because crowdfunding investors tend to be more socially conscious. They are more eager to invest in companies that align with their outlooks on social causes. Since consumers are becoming more concerned about climate change and environmental preservation, they are more willing to invest in green businesses.
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